What We Don’t Consider Start-Up Costs
First of all, while we agree with James that you could include the price of your chair, computer , Internet connection, etc. into your start-up costs, we don’t. (Unless we’re writing stuff off on our taxes. Then we might reconsider…) As it stands, we were already online with the fast connections and had computers before we started this whole freelancing thing. In fact, that was part of helped us to make the decision to start our business. If we’d each needed to go out and buy a computer, desk, chair, etc, we would absolutely not be here right now. We didn’t even have to buy any special software, although I can see where freelance graphic designers might need to update their stuff pretty regularly.
As for the whole electricity/heat bill/cell phone argument; it’s a moot point for us. In Tamara’s case, she and her husband would be switching off being home with their daughter, so the bills would be almost exactly the same. We use our personal cell phones for business and use scanning and emailing in place of faxing, so those aren’t additional expenses, either.
Could these things be considered start-up costs? Absolutely. We could easily stock our home offices with the latest gadgets and ergonomic chairs, put in separate phone lines for faxing or business, or even buy expensive invoicing software. They would probably even make our jobs easier. However, they aren’t necessary, and that’s the big difference. The beauty of freelancing is that there is more than one way to get the job done.
Freelancing Saves Us Money
I have to admit that I pay a fair amount of money for childcare these days. It’s still considerably less than I would pay to have an infant in daycare, but I think it’s totally worth it. Our mother’s helper comes to the house three days a week to play with the baby while I sit with my back to them and type furiously for four hours. In the long run, I probably save about $100 a month versus what I would pay to put her in daycare. Not to mention the fact that I’m here any time she needs anything. Tamara’s childcare costs are considerably less, since she thrives on finding cheap alternatives that entertain her child while allowing her to get work done.
Of course, Tamara and I save a huge amount of money by not needing to commute. In fact, I don’t really even drive. We keep me insured in case of emergency, but if I need to go somewhere, I generally either walk or take the bus. I don’t even know how much money this saves, but I would guess it’s easily a couple hundred dollars a month. In addition, I’m not tempted to eat out. I can tell you my daily expenses: $1.73. Each day I take the baby for a walk and stop at the little grocer down the street and get my one Mountain Dew. (The lactation consultant says I can have one caffeinated drink a day.)
Seriously, this is my daily expenditure. Tamara used to spend that much every day on pantyhose alone.
So, when we say that we started our business for $220, we mean it.
Costs We Think are Important to Mention
As some of the commentators have mentioned, though, there are continuing costs involved with running your freelance company. If you aren’t interested in growing much, you can certainly continue on for little more than the ongoing need to re-up your Guru/Elance account and maybe occasionally consider replacing an obsolete computer. Really, you can do it like that.
We, on the other hand, have worked to grow our business over the last year, and it has taken some money. Still, I would say that the amount we spent is significantly less than what we would have had to put out on having a “real job.” By not buying lunches out and filling the gas tank, we have more than saved enough money to put into our business.
Our expenses:
A website
Business cards
Note cards
A new blog
Of those, I’d say that the website and the business cards were the most important.
Other expenses…um…we’ve started paying a couple of writers to take on some projects, so that might count. Of course, we have a system in place to make sure the business can pay for that: Fifteen percent of every payment we receive goes into the business account. This money is used to pay for the above mentioned items.
Oh, and We’re Very Fortunate…
One of the reasons that we have been able to start and run our business for so little is because we both have spouses that work. We aren’t trying to say that anyone can just jump in with $220 and all of a sudden be able to pay all the bills and take vacations to Tahiti. Neither one of us needed to make enough income to pay the mortgage, buy the groceries, or (as several of you mentioned) pay for health insurance. We definitely had time on our side, and that means that we’ve been able to grow our business over the last 14 months without having to constantly be worried about having our electricity shut off.
As with any real opportunity, freelancing isn’t a get-rich-quick scheme. It takes a lot of work and energy. And yes, it takes some money, too. Sure, things are easier if you have more money to start out. Still, you’re going to need to “pay” your dues, and that has little to do with a dollar amount.
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Christina Lemmey is the mother of two school-aged girls, a wife, and the owner of 
Hey there! Thanks for the mention in your summary. This debate gave me lots to think about. I still stick by my assertion that the “starving artist” mindset create more obstacles than growth for freelancers. As I said in one of the posts on the Men with Pens post, starting on a shoestring is possible, but continuing to operate on a shoestring isn’t so great.
One idea that has started forming around this topic is that the amount of money one spends depends on other things too. I would never have had Genesis’ patience–it took over a year to get traction with the $1 and Internet cafe route. When I decide to jump, I jump, and there is some expense involved.
Actually, I had very few start up costs myself, in light of your definitions. I already had a computer–I opened an Elance account while I was still working a corporate job. In 6 weeks, I had booked over $20K in projects, and went in to my boss and quit. Elance figured prominently in the fast growth of my company, helping me break the 6-figure revenue line in less than 2 years. In that time, I had to step up to higher operating costs–but it was worth it…I netted additional income by way of subcontractors, so that hourly earning were higher than what I could make on my own. I am able to offer wider and more comprehensive solutions now, which means I can grow the company beyond my own keyboard. This kind of growth is necessary for me-staying chained to the keyboard and the clock would get too confining, even though I love writing.
Anyway…I do see both sides of the story, but I also strongly believe that too many freelancers stick with small thinking. There is absolutely no reason why a free agent can’t make over $100K per year without a huge increase in overhead or cost of sales. The main thing that stands in their way is their own thinking…and bragging about how little one spends to be in business tends to perpetuate the scarcity view that stymies many folks.
Sorry for the long post…sigh…guess I’d better go blog on this myself! Laugh! Thanks for teeing this whole thing up…gave my week some extra spice!
Trish Lambert
Success in Sweatpants
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@Trish – You make some very good points. While the starving artist thing may be romantic, it’s certainly not what either Tamara or I are going for at this point in our lives. On the other hand, we know that neither one of us is all that interested in working full time. That is one of the coolest things about this freelancing gig…we can decide what works for us.
I like what you have to say about scarcity and poverty thinking, and I’ll be putting more thought into that myself. I don’t have my ideas formed well enough to talk about it here yet, but I really appreciate the food for thought.
Also, I’m impressed/jealous/amazed and happy for you to have had such a good experience with Elance. I keep hearing that there’s such opportunity there, but we just didn’t seem to be able to make it work for us. Perhaps we’ll have to give it another go one of these days.
Like you and others have said, you probably don’t want to have to bootstrap forever, but there is something to be said for being in a business where the vast majority of what you make can go into your own pocket instead of back out the door!
Hey Lorna,
I think you and I are on the same page. Why would you “pay” for a chair that you already have? I can see James’ point though — lots of business people account for *everything*. But unless you are physically paying the household for use of that chair, it’s already paid for.
(Even if you want to be a business stickler, why not set up a 99-year leases worth $1. Still “good business” and doesn’t cost as much…)
You don’t even need business cards or a website to start up really — not if you are going through eLance or something. All you need is a computer and an Internet connection, both of which most people already have.
So although it may not be advisable, you can actually launch your freelance writing career with $0. As Trish points out (sort of), once you’ve tested the waters, you can decide later whether or not to commit more to it.
BTW, thanks for the link back!
~Graham
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There are a number of businesses that you can start without monetary investment. My freelance writing was started on an old office computer and dialup. It was only when I was to the point of full time INCOME that I upgraded to cable.
My children are starting a flower business – they are taking the iris and daylilies that were given to use over the years, using old pots from a nursery to pot them up and selling them. They will use the profits to build their first greenhouse.
Money make things easier – but it is not a necessity.
Kathryns last blog post..Freelance Writers Need to Procrastinate
“it beats the pants off of working for The Man”
Ahh, is that what I said?
Actually, I think this is a great discussion and one that every new entrepreneur/freelancer should read.
What I’m finding is that there is no set answer. Cost is relative to where you are starting from and what your goals are.
Interesting.
I’m a newbie. I had an article of mine published in a newspaper but that’s it. I attended a magazine writer’s conference and learned tons of things, too.
I dunno.
I wish I could write a killer article on my blog, have it turn into some sort of mega-viral article, launch a mega-million-dollar writing/book empire, and richly slink off into a golden sunset.
I like this blog – I’ll be back.
Thanks!
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